Finding the right home insurance is important, to protect what is likely to be your most valuable asset.
Shopping around is the key to finding affordable cover that provides value for money.
The average price of a household combined buildings and contents policy in the third quarter of 2024 was £407, according to the Association of British Insurers (ABI), 3% higher than the previous quarter and 16% more than in the same period last year.
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The ABI said the increase in premiums is due to adverse weather events that are becoming increasingly common – and mean more claims for insurers to cover.
Insurers paid out £1.6 billion in claims in the last quarter of 2024, which brings the total cost for the year to £5.7 billion – the largest amount paid out in any year on record.
Separate data from Go.Compare Home Insurance suggests the cost of a combined home insurance policy has risen 8.5% in the last year, with the average policy costing £231 between October and December 2024, compared to £213 in the same period in 2023.
While premiums are getting more expensive, the good news is that there are plenty of ways to trim your premiums without compromising on your cover. We explain how.
How to cut home insurance costs
1. Combine your home insurance policies
Instead of buying separate buildings and contents cover, a simple option is to combine your policies, as most insurers are likely to give you a discount for buying two policies from them.
Contents insurance covers your home possessions in the case of any loss, theft, damage or destruction. It usually includes anything that’s not a property fixture (i.e. that you could take with you when moving home), such as furniture, appliances, clothing, electronics, furnishings and personal items. You’ll pay more for accidental damage cover and for cover away from the home.
On the other hand, building insurance covers the damage repair cost of your home in the case of a fire, flood, storm or vandalism. Most buildings insurance covers the cost of damage to walls, roofs, floors or any other fixtures.
2. Pay for your insurance annually rather than monthly
Another good option is to pay for your insurance annually rather than monthly. Many people choose to pay monthly as it seems easier to pay in small chunks than one lump sum. But you will pay more in the long run because insurance firms charge more if you choose to pay monthly.
That’s because monthly payments are treated as a credit agreement and they charge for providing that credit service. You’ll have to sign a separate credit agreement and the total amount will be more (sometimes a lot more) than if you pay in one lump sum. On average a home insurance policy costs 19% more if you pay monthly, according to Go.Compare.
A more cost-effective way to pay, if you don’t want to pay the full amount, is to put it on an interest-free credit card and pay that off in monthly payments instead.
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Header Cell - Column 0
Average total cost for monthly premium*
Average cost for an annual premium*
Cost-saving with an annual premium
Combined home insurance
£285
£231
19%
Buildings insurance
£242
£208
14%
Contents insurance
£89
£66
26%
*Based on the median premium of home insurance sales made through Go.Compare between 1 October, 2024 and 31 December, 2024.
3. Improve your home security
You may also want to consider spending a little money now to save you money on your premiums in the years ahead. For example, upgrading your home security to try protect the property from burglars could save you money in the long run.
“Your insurer will ask you about any security measures you have in your home when calculating the cost of your premium,” explains Nathan Blackler, spokesperson for Go.Compare Home Insurance. “So it’s worth comparing the cost of upgrading your home security measures versus the cost of your home insurance quote without them.
“Higher levels of security make your home less attractive to burglars so it's worth checking that all access points to your home are secure – thief-resistant locks that meet British Standard 3621 are preferred by insurers and could help reduce your premium.
“Measures such as installing an approved burglar alarm, CCTV systems and security lighting are also good steps to take and could further influence the cost of your insurance. Tell insurers about these measures when getting a quote for a policy and it could affect your policy price, as well as give you peace of mind that your home is properly protected.”
Lock manufacturer Yale says upgrading your home security could shave up to 10% off your premiums.
These schemes are used to reduce local crime. It also means that if your area has less crime, there are lesser chances of you having to make an insurance claim.
When insurers recognise this and see that you’re part of the watch, it can typically reduce your premiums by 5%.
5. Check your policy and think about skipping the extras
Consider what you are paying for. There are several extras you can add to your policy that will increase the cost, but you may not really need them.
Emergency home protection (relating to heating, plumbing and drainage crises) usually adds around £50 a year to your insurance bill, according to Go.Compare.
Accidental damage cover bumps premiums up by an average of 10%.
6. Don't forget your no-claims bonus
Finally, don’t forget your no-claims bonus. Insurers love customers who pay them premiums but don’t make a claim. So, they will give you a no-claims bonus.
Even a one-year no-claims bonus could cut your insurance by 10%, rising to as much as 50% if you have five years or more without claims, says Go.Compare.
7. Increase your excess
Another way to cut your premiums is to increase your excess. If you are happy to pay more if you do make a claim, your premiums will fall substantially. For example, putting your excess up to £400 from zero could reduce your premiums by around 25%.
8. Check admin charges
Insurers often impose administration charges to your policy which you may not notice initially. You could be charged when you cancel your policy or if you make any changes to your personal details, like switching banks, or if you pay monthly and miss a payment. The Post Office for instance charges £10 a time for policy changes, even when you make them yourself online.
That’s why it’s important to understand what you could be charged for on top of your premium to avoid unnecessary and unexpected costs.
How much should home insurance cost in the UK?
The cost of a home insurance policy will all depend on the size of your home. The latest data from Go.Compare shows the overall average price of a combined home insurance policy was £231.
Yet for a one-bedroom home the average cost falls to £169, a two-bedroom would be £178, three-bedrooms would cost £208 to insure, while for four bedrooms you would pay an average of £286. The cost jumps to £419 for five-bedroom properties.
Your premium might be more or less than this, as the premium is calculated according to other factors such as where you live, the age of your house and the type of property you live in.
Do house insurance premiums increase after a claim?
Once a claim is made on an insurance policy, you will be seen as a slightly higher risk by insurance companies. The higher the perceived risk, the higher the cost of insurance.
So if you make a claim it’s very likely that at your next renewal there will be a rise in the cost of your premium.
It’s important that you declare any claims made to any new insurers. They can and will check anyway - your claims history is stored on the Claims and Underwriting Exchange (CUE) database for six years.
So before making a claim, first weigh up if it’s going to be worth it in the long run.
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Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.
Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.
Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.
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